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Nokia sells HERE to Audi, BMW and Daimler for €2.5 billion

Nokia has continued its transition towards focusing entirely in networking by selling its HERE navigation arm to a consortium of German car makers for a net total of €2.5 billion.

The sale of HERE had been widely anticipated following the Alcatel-Lucent acquisition announcement. While it is consistent with Nokia’s consolidation strategy, this sale also marks another asset write down, with the price being less than half €5.4 billion Nokia paid for NAVTEQ back in 2007.

Furthermore, while the ‘enterprise value’ of the deal (i.e. not including debt) is €2.8 billion, Nokia only expect to book a gain from the deal of €1 billion after the “release of cumulative foreign exchange translation differences,” whatever that means.

“With this step we complete the latest stage of Nokia’s transformation,” said Nokia CEO Rajeev Suri. “We integrated the former Nokia Siemens Networks, divested our Devices & Services business, and have now reached agreement on a transaction for HERE that we believe is the best path forward for our shareholders, as well as the customers and employees of HERE.

“Going forward, we will focus on our planned combination with Alcatel-Lucent. Once that is complete, Nokia will be a renewed company, with a world-leading network technology and services business, as well as the licensing and innovation engine of Nokia Technologies.”

The interest on the part of Audi, BMW and Daimler (which owns Mercedes Benz) would appear to be differentiation. There are very few providers of the underlying maps for navigations systems and as Apple demonstrated a few years ago, it’s not an easy thing to do from scratch. This is yet another area in which Google pulled the rug out from under Nokia and now the car companies will be able to offer their customers something different, more tailored for in-car use and apparently featuring extensive use of crowd-sourced data from their cars.

“Our environment is constantly changing. That’s why the information in digital maps has to be continually updated so that maximum utility can be offered,” said Rupert Stadler, Chairman of the Audi Board. “The high-precision cameras and sensors installed in modern cars are the digital eyes for updating mobility data and maps; in this way, information such as speed limits or critical driving situations are already recognized today.”

“High-precision digital maps are a crucial component of the mobility of the future,” said Dieter Zetsche, Chairman of the Daimler Board. “With the joint acquisition of HERE, we want to secure the independence of this central service for all vehicle manufacturers, suppliers and customers in other industries.”

While it wasn’t positioned as such at the time, Nokia was apparently setting itself up to be a network company way back when it split itself into four: devices, networks, mapping and patents. At around the same time it bought Siemens’ share of NSN and soon after sold the devices business to Microsoft. This latest disposal just leaves networks and Nokia Technologies which, for the time being at least, seems to exist primarily to extract value from existing patents.

In essence the Alcatel-Lucent deal has to work. It will be a while, assuming nothing prevents the deal completing, before the combined company settles down and reaches full effectiveness. But when it does, it needs to be able to effectively compete in 5G if we’re not going to be reading about yet another Nokia corporate sob story.

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